Wednesday, October 22, 2008

Boost Your Credit Score and Get a Free Vacation

I take great advantage of credit card offers. We do have a couple of cards that we carry a balance on and over the years the balance has gone up and down but never completely away. That said, I have also never paid interest on those balances. On average I open and close about 5-6 credit cards a year, taking advantage of 0% APR on balance transfers and purchases. I try to get only cards with this offer good for at least 12 months to minimize balance transfer fees. The fee to transfer a balance is usually 3% but it is a one time fee and some cards cap it at $75-$99 per transfer. So that is 3% (or less) APR for the year. Can't beat those rates. And it has not seemed to affect my credit rating - if anything it has probably improved it over the years as I have many examples of cards with a relatively high balance being paid off each year. I have done this for more than 10 years and my credit score is very good.

Another way I take advantage of credit cards is with rewards. I have a shell card which I pay off each month and only use for gas. At 5% credit toward shell gas purchases, I can figure $.15 to $.21 a gallon off at 5% - well worth it! My last two statements have had $33 and $26 credits from gas purchases. No yearly fee on this card.

Both my husband and I got American Express gold cards this year and received 100,000 AE points, (50,000 each account) enough for 4 domestic airline tickets (at least for Alaska Airlines flights). And yes I have checked and I can pretty much choose my dates and times for Alaska Airlines flights right now using those points. The first year membership fees are waived. I am coming up on my membership fee being due this spring, so to get the most out of the offer I will have to book a flight by then and cancel the card. But even if I don't, I can transfer the points to my Priority Club account, although 50,000 AE points only gets me 10,000 PC points.

So that brings me to Priority Club. If you don't have a membership and you do ANY traveling, you need to sign up for one. It's free. Use it when booking and checking into hotels and get points. Points can be used for a free night stay at participating hotels (usually starting at around 10,000 points per night) or converted to airline miles for a variety of airlines. Right now, you can also sign up for a Priority Club credit card through Chase with 0% purchases and balance transfers for 6 months and get 30,000 bonus points to your Priority Club account. That is 3 nights of hotel stay. Just make one purchase, (no small print as to the size of the purchase) to get your points. Then you can cancel the card at any time. Yearly fee for the card is waived for the first year.

So - for FREE you can get 2 domestic airline tickets and 3 nights stay in a hotel. If both you and your spouse sign up separately, that would be 4 airline tickets and 6 nights hotel!

Does it work? I haven't tried using priority club points yet but I have taken two vacations in the past year and a half with free airline tickets. Last year we used 25,000 capital one points to purchase one ticket from Portland to Orlando, and 40,000 Alaska Airlines miles to purchase the other two so the three of us flew to Disneyworld for free. No problem at all getting the reservations booked. The previous summer we flew to Disneyland using 25,000 capital one miles to book one ticket, and buying the second ticket so we could use Alaska Airlines kids fly free to get Jaxon's ticket free. So again, 3 airline tickets for the price of one and no problem at all booking the flights we wanted.

The caveat if you are doing balance transfers - you have to be responsible if you expect to keep your 0%APR. Generally, when you first set up the credit card, you can select your billing date. I get paid on the 15th and 30th of each month. My end of the month check pays the mortgage so I try to keep all other bills after the 15th. I usually pick the 20th of the month for a payment due date. As SOON AS I GET PAID on the 15th I go online and schedule a payment for each credit card. Sometimes, I even set the credit card account to auto pay the minimum balance each month on the 20th. If you are late on your minimum payment by even ONE DAY the APR will default, often to an extremely high rate, 20-29%. I am ABSOLUTELY SURE TO NEVER be late on a credit card payment. EVER.

Another thing to consider, although I always transfer my balances before the 0% APR expires, I make sure that if I were not able to transfer again, the rate would not be horrendous. Most of my cards would be 9.9-12.9% if the 0% ended. When I get the card, I write in permanent marker on the front the month that the 0% will end to remind me to transfer the balance and close the card before the offer ends. With these tips in mind, I have never had a problem doing this.

I recently worried that with the lending crunch I would not get approval on a new 0% card, or that if I did the credit limit would be so low that it wouldn't matter. This is not the case. I have recently applied for a few with no problem.

And anyone thinking I may be a good target for identity theft? Forget it. I religiously watch my accounts and my credit reports.